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ACI’s 3rd Annual Summit on Digital Advertising: Social Media, Sweepstakes & Promotions

Deploying Gamification to Sweepstakes and Promotions to Engage Consumers and Enhance

Brand Loyalty

September 8-10, 2014

Arlene K. Alexander

Benefits, Marketing & Intellectual Property Counsel

White Castle Management Co.

Sheila Jambekar

Senior Counsel,

Zynga, Inc.

Melissa Landau Steinman

Partner

Venable LLP

Tweeting about this conference?

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Why Add Gaming to Your Sweepstakes or

Social Media?

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1. New Way to Engage Customer and/or Capture a Certain Audience

•By platform (Facebook, Twitter, LinkedIn, smartphones, etc).

•By demographics

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2. Raise Awareness of Brand/Company

• Incentive attracts customers to marketing message of your brand

•Competition – draw attention from your competitors

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3. Encourage Sharing of Brand Experience in Social Media

• Inexpensive Marketing

•Obtain feedback – What does the customer think about your product?

• Earned media – value associated with sharing of company posts

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4. Strengthen Connection With Followers

•Connect with Brand

•Build and connect with “community” – group rewards

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5. Data Capture

•Preferences – if given various choices, which will be acted upon?

•Behaviors – more likely to use earned or random discount?

•Grow email list • Caveat: Provide proper disclosures in related marketing materials

and privacy policy

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6. FUN !!!

•Offer instant gratification to customers

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Sweepstakes vs.

Illegal Gambling

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I. Illegal Lottery & Gambling Laws

• Prohibit promotions having all of the following elements: • PRIZE – something of value.

• RANDOM CHANCE – winning depends on factors outside a person’s control (versus skill).

• CONSIDERATION – requirement that something of value be given to enter the promotion. • Payment of money (even payment to third party, such as fee to send a

text).

• Make a purchase

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II. Sweepstakes

•Promotions based on random chance in which a prize is awarded. • Cannot require consideration

• If consideration is requested to enter (such as purchase of brand item), alternate method of free entry must be included • Cannot favor one form of entry over another

• Must be clear and conspicuous

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Text-to-win Sweepstakes

•Must provide free method of entry if text messaging is subject to standard rates.

•Good practice: Check Mobile Marketing Association guidelines

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Jurisdiction

•Primarily regulated at state level • Direct mail - also federal

• Register and/or post bond – Arizona, Florida, New York & Rhode Island

• Advertising laws may apply

• Additional laws may apply: • Industry-related

• Method of advertising – game piece in bottle cap

• Intended audience – Children’s Online Privacy Protection Act (COPPA)

• Jurisdiction – Rhode Island requires rules to be posted in stores

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III. Advertising of Sweepstakes •Disclose Material Terms:

• Sponsor Identity

• Start and End Dates

• Eligibility Requirements (age, residence, etc.)

•No Purchase Necessary

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Advertising - Federal Law

•Deceptive Mail Prevention and Enforcement Act • Must provide free method to remove name

from sponsor’s mailing list. Sponsor has 60 days to comply

• If mailing has entry materials, disclosures must be set forth: • No purchase necessary

• Purchase will not improve chance of winning; and,

• Complete official rules

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Advertising – State Laws

• Some have required disclosures for mail solicitations • Prize and eligibility restrictions

• Entry requirements and deadlines

• Description of prize, its approximate retail value, and odds of winning

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Advertising – State Laws (cont.)

•Other states prohibit sponsor from making certain representations: • Chance of winning will be improved by

purchase of product

• Person is a winner, is specially selected, or is a finalist (unless true)

• Mailing is urgent or time-sensitive (unless true)

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IV. Best Practices

• Provide an alternate method of entry

• Identify bonding and registration requirements of each state

• Determine necessary disclosures

• Rules must be compliant and consistent across legal platforms

• Make sure your game is legal.

• Structure

• Venue

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Prizes, sweepstakes, and lotteries were listed in 6th place on the FTC’s 2013

Complaint List

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What is Virtual Currency?

• US Treasury – “a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency”

• European Central Bank – “a type of unregulated, digital

money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community”

• European Banking Authority – “a digital representation of

value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically”

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Categories of Virtual Currency

• Fully-closed loop • E.g., World of Warcraft Gold

• Partially-closed loop • E.g., Farmville Farmcash

• Convertible • E.g., Linden dollars for Second Life; BitCoin

• Centralized • Single repository/administrator; purchaser of centralized VC transfers

real $ to entity that credits purchaser’s account with VC • E.g., Linden Dollars

• Decentralized • No central repository/authority for managing currency; usually obtained

by purchase on open market or completing tasks to aid in operation of currency

• E.g., BitCoin

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Using Virtual Currency in Sweeps and Promotions

Key Question:

Does the form of virtual currency you are using have a real world value?

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Using Virtual Currency in Sweeps and Promotions

• Scenario 1:

• Spend virtual currency, get a chance to win more virtual currency.

• Scenario 2:

• Spend fiat (aka real) money, get a chance to win virtual currency.

• Scenario 3:

• Spend virtual currency, get a chance to win real world prizes.

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Gambling and Casino Mechanics

Check with gambling counsel:

• Sports betting

• Poker (Poker sweeps)

• Casino-style mechanics or look and feel

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Virtual Currency: Tax and Other Legal Implications

• Is virtual currency property? • Bitcoin – according to the IRS, it is property

• Do you need to collect sales tax on it if you sell it? • State-by-state analysis

• Escheatment issues • Transferability – what about accounts/unused amounts?

• FinCen rules • Money services business and money transmitter regulations

• Watch for state rules regulating VC • E.g., NY Dep’t of Financial Svs proposed rules re: cryptocurrency like

Bitcoin

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Lessons in Gamification Integrating Gamification into Sweepstakes and Promotions

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• Marriott set up My Marriott Hotel game for recruitment, allowing players to manage their own kitchen

• Game included Links to Marriott career site

• Over 25,000 players joined in first week after launch

Integrating Gamification: Marriott

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Marriott My Hotel

• Challenges • Limited market for game

But—learnings used in creating Social Xplor Game/App

• Many other companies have used games for recruiting, training, and feedback: • Domino’s—make your own pizza and

apply for a job at the same time!

• Sun Microsystems—created adventure game to replace new-hire training

• Facebook—uses games for quick reviews and feedback

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Marriott Social Xplor

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Marriott Social Xplor

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Marriott Social Xplor

Legal/Practical Issues: • Registration and bonding required?

• Importance of trademark knockout search and registration

• Email and mobile marketing efforts: compliance challenges • Mobile app—need for carrier approval, compliance with TCPA

requirements for express consent

• Mapping out social media campaign

• Implications of proposal to expand play to other countries? Brazil, France, UAE, China, Canada • What are the issues when running an international contest? E.g., taxes,

prize fulfillment, translation, registration

• Privacy

• Use of Rewards Program to appeal to core customer

• Practical challenges posed by complexity of gameplay

• Integrations/in-app brand marketing

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Pepsi Integration

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Pepsi Integration

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Hertz Integration

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Hertz Integration

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• Scarecrow film and arcade-style mobile game encourages users to buy natural and wholesome food by asking you to outsmart the “Crowbot” and unlock prizes in the form of a BOGO offer redeemable in 1500 locations worldwide

• 6.5 million YouTube views in less than two weeks; sales spiked in Q1 2014; top honors at the 2014 Cannes Lions Festival

Integrating Gamification: Chipotle Scarecrow Game

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Chipotle Scarecrow Game • Some argue the “advergame” is designed to push unhealthy food

and drinks to children by exploiting legal loophole in the regulations applicable to advertising through traditional media.

• As of late August 2014 , no prizes left.

• Rules: contest runs “until 12/31/2014 or until supplies last.”

• Is there consideration when a BOGO is offered as a prize?

• US entrants only are eligible, who can redeem prize at any “participating restaurant”– does this include international?

• Is there any list of participating locations provided?

• Rules must be clear with games just as they must be clear with traditional sweepstakes

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• Business Model: Social media application allowing users to “check-in” at locations.

• Gamification Strategy: Leaderboards ranked users against friends based on check-ins. Badges showed user’s achievements.

• Outcome: Over time, Foursquare experienced a drop in consumer interaction and in 2012 announced it was moving away from check-in focus to social updates, deals and recommendations.

Integrating Gamification: Foursquare

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Foursquare • What went wrong?

• Virtual rewards should be meaningful

• Accomplishments often carry no real distinction

• Ex: Foursquare “Game of Cones” promotion asked users to rank highest ice cream places by checking in on the app and using a hashtag. Winning restaurant would win an “Iron Cone” badge to be displayed on their business profile. Only 6000 check ins in NYC and even fewer in SF because no incentive

• Game should encourage interaction. Original leaderboard system scored only through check-ins. A score combining comments, ratings, etc. would have encouraged more interaction

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Gamification as Sweepstakes Mechanism

• Toyota and Home Shopping Network “More the Merrier Sweepstakes” • Sponsored by Toyota, sweeps lets

consumers enter by redeeming points from an online arcade

• Consumers earn points by watching videos or playing online games (e.g., watching Toyota ad worth 700 points)

• Frontier Communications Holiday Sweepstakes • Frontier Communications sweepstakes

supported by a “Frank’s Chimney Dash” Facebook game featuring the company mascot, Frank the Buffalo

• Increased number of Facebook followers and created a community

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Takeaways • Planning is important—and Legal should be involved from the beginning

• In particular, mobile approvals can take considerable time

• Geographic scope should be carefully considered from the start

• Games should offer meaningful rewards

• Gamification for sake of gamification does not work

• If virtual currency will be used, implications must be carefully considered

• Gamification done right is still an effective tool

• Can generate buzz and encourage interaction

• Can use social media and loyalty programs to generate buzz—provided that you comply with platform rules, CAN-SPAM, and your own program terms!

• Brand integrations can strengthen programs, but may trigger need for partner agreements and compliance with third party marketing guidelines

• One size does not fit all

• Game should have a strategic purpose (e.g., Chipotle)

• Consider whether there are additional regulations that apply because of audience (e.g., children)

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QUESTIONS?